WorldOil

Bad biorhythms throw contractors out of sync with independent operators

Characterizing the state of the industry in 2006 is akin to characterizing someone whose biorhythm cycles are out of sync. Instead of the traditional physical, emotional and intellectual cycles associated with biorhythms, our industry this year was dominated by the cycles of commodity prices and service costs. Throughout the year, these two cycles oscillated and remained out of phase. This, in turn, created opportunities and strife for independents and service companies operating in the Gulf of Mexico during 2006. At the beginning of the year, the commodity price curve was at its peak, due largely to the devastation and production shortages caused by the hurricanes of 2005. At the same time, the curve associated with costs of services was still lagging and had yet to reflect our industry’s full response to these storms. Demand for services hits a peak. What occurred early in the year was an unprecedented demand for support services in the Gulf of Mexico.